Today we are taking a look at the most important stock sector in the world: Financials. If Financials are leading the stock market higher, it's hard to be bearish equities as an asset class. The first thing we want to do is start from the top with Financials relative to the rest of the market as well as from a long-term perspective. Then we'll take a look at some breadth internals and the sub-sectors that fall within the larger spectrum of Financials, like Regional Banks and Insurance. Once we get structural perspective on Financials as a group, then we'll work our way down to the individual stock level. That's the top/down approach that we incorporate into every sector in the market and country around the world.
Every month I host a conference call for All Star Charts Premium Members where we discuss ongoing themes throughout the global marketplace as well as changes in trends where new positions would be most appropriate. This includes U.S. Stocks & Sectors, International Stock Indexes, Commodities, Currencies and Interest Rate Markets.
We've been bullish towards US and Global Stocks once again since last month. I still think this is an environment where we need to be buying weakness in stocks, not selling strength. The weight of the evidence is still pointing to an increased amount of risk appetite, not risk aversion. What we're seeing in the bond market, however, is suggesting interest rates are heading higher. The implications here for assets like Gold, Silver, Crude Oil and the US Dollar is also important to recognize.
I'll do my best to lay out my weight of the evidence conclusions and walk you step by step with how I got there! This month's Conference Call will be held on Monday June 19th at 7PM ET. Here are the Registration Details:
The Bond Market is a very misunderstood place. Usually all we hear are complaints. Fed this, Yellen that, something about her books being beige. I don't know. I can't keep up anymore. To me the Bond Market is place to find information that we can't get anywhere else. Even if you don't trade bonds, you must care about the direction of interest rates. But more importantly it's the intermarket implications of movements in rates that we're most concerned about. How is the next 3-6 month direction of interest rates and credit spreads going to affect stocks and commodities? WAs investors we're obviously interested in all of these things.
Earlier in 2017, I mentioned this was going to be an exciting year filled with new additions to AllStarCharts.com. I’m excited to announce one of the many today with the launching ofAll Star Charts EDU. This new addition is an educational section of the site dedicated to helping users grow their knowledge of technical analysis. With each one of these tools and principles, I also explain how I personally use it and how it helps me throughout my process. I think this will give you a better understanding as to how I approach the market and can also be used as a resource in the future.
Register here for our live monthly conference call for Premium Members of All Star Charts India.
June's Strategy Session will be held on Tuesday, June 8th at 7 PM IST. As always, if you cannot make the call live, the video and slides will be archived and published here along with all of our past conference calls.
This concept of new 52-week highs can be somewhat confusing. I get it. How does it work? If we make new highs and the list of new highs doesn't confirm, do we short everything? How do we know if and when the internals of the market have confirmed or diverged from whatever the price of the index itself is doing? These days, it seems like people have more questions than answers. So today we'll take a look at what's going on and see if we can try to work through it together.
It's the end of the month so you know what that means: Brand new freshly completed monthly candlesticks for us to review. While I normally use weekly charts to get structural perspective on markets and then daily charts for tactical purposes, the monthly chart review is done at the end of each month to help identify the primary trends around the market. This is for us who want to avoid the day to day noise surrounding politics or the Fed or whatever news story is being sensationalized this week.
Precious metals are in a downtrend. There is no question in my mind that prices have been heading lower, not higher. We had a beautiful counter-trend rally in the first half of last year and we took full advantage of that from the long side. But our upside objectives were hit in the Summer. Since then it's either been a short or neutral in terms of positioning. At this point we want to continue with this approach and mindset within this group of securities - both the stocks and commodities. Long positions here make little sense to me from any sort of intermediate-term horizon.
Chartered Market Technician and author of The Daily Gold, Jordan Roy-Byrne invited me on his Daily Gold Podcast last week. We discuss both the short-term and longer-term implications of the behavior of the metals market lately. This is the Gold post he references throughout the interview.
This is a global market environment. The S&P500 goes up and down based on the collective money flow from investors all over the world, not just within the borders of the United States. There are some people still fighting the civil war who simply don't understand this concept. US Stocks don't move up and down based on what is happening in America. What happens in the United States politically, economically, tax-wise, etc is just a tiny tiny piece of a humongous puzzle. This is a global market environment and the sooner you recognize that the bigger the advantage you will have over others who have not yet accepted this concept.
Even if you only trade US Stocks, or stocks local to where you live, understanding what is happening globally is essential to recognizing the direction of the underlying trend for the asset. And this trend identification is step 1 to market analysis. Today I went through every stock market index in the world to see if there is more good or more bad out there. Here are a few stand outs:
It's hard being a gold bug. They rarely ever get to be right. But why don't they ever change their mind when the data changes? I don't get it. There is nothing wrong with being bullish gold, but there is something wrong with always being bullish gold.
This is one of my favorite exercises. We want to recognize that we as human beings are terrible investors. It's not our fault, it's just how we're built. So to overcome that we first to be aware of it. This alone puts you in the 1% and gives you a huge advantage over others who are not aware. To further help ourselves, we need to avoid letting our other biases affect our judgement. This is almost impossible.
